Liquid Assets or Simply Underwater

Remember when coastal real estate was a liquid asset and great investment?  If you wanted to make a lot of money quickly, the conventional wisdom was to buy some coastal real estate, hold it for a few years and then flip it to the next hungry investor. Like a house of cards, such trading collapsed with the Great Recession of 2008.  Speculators who failed to cash out before the real estate bubble burst found they were stuck with overpriced land, houses and empty lots that nobody wants.

The fallout of this rampant speculation in real estate has been catastrophic on the economy. Investors face foreclosures, the banks crashed and needed large taxpayer bailouts and small businesses went bankrupt. Joblessness swelled and continues to linger. An economic malaise infects our thinking making it hard to feel optimistic about the future.

No one predicts with any certainty when real estate will once again be viewed as a safe place to put your money. Needless to say, people now buy real estate when they really need a place to live, and if the price is reasonable. It’s clearly a buyer’s market.

In hindsight, it’s easy to see now that what occurred in real estate during the boom years could not be sustained. It’s just not possible to defy the basics of growth and demand.  Past permanent and seasonal population growth estimates based upon the U.S. Census have been remarkably accurate. The amount of real estate that was transformed into development projects greatly exceeded projected population demands. This over-supply in real estate projects combined with the downward spiral in the ability of people to afford to buy them all combined to cause the inevitable to happen—a crash in the market.

Vacant, unused development projects now consume land that would be more productive economically and ecologically as woods, farms or wetlands. Had we asked harder questions about the actual demand for these new projects and where they should be located and how they were be provided with public services, the real-estate crash might have had a much softer landing on investors, taxpayers and workers. Instead, nobody — including government regulatory agencies, lenders and insurers — imposed significant constraints on these get-rich quick ventures.  As a result, investors learned the hard way what it means to speculate with their money.  Sometimes you do well with speculations, and then again, sometimes you don’t.

There is now the opportunity to learn from our mistakes, and put in place common sense land-use plans and regulatory requirements that will help to pace and direct development based upon the future needs of our coastal communities.  Those communities that do foster sustainable land uses based on reasonable growth projections and good environmental management programs will be much resilient to future economic and natural upheavals.

About the Author

Todd Miller

Todd founded the North Carolina Coastal Federation in 1982. A native of Carteret County, he was selected in 2013 as a distinguished alumni of the University of North Carolina at Chapel Hill where he received his undergraduate and masters degrees. Todd also received The Old North State Award in 2007, the National Wetlands Community Leader Award in 2012 and the Peter Benchley Ocean Awards' Hero of Seas Award in 2015. He is a founding board member of Restore America Estuaries, a member of the Board of Visitors for the UNC Institute for the Environment and chairman of the Policy Committee for the Albemarle-Pamlico Estuary Partnership. As executive director, Todd formulates the federation’s goals and policy positions, serves as the federation’s spokesperson and provides staff and operations oversight.